New Jersey’s Long-term Finances Again Rank Worst in Nation
A conservative think tank that analyzes each state’s annual financial statements concludes, for the fifth year in a row, that New Jersey is in the worst long-term financial condition in the country.
It’s part of a string of national analyses that document New Jersey’s still-difficult fiscal position, both in the short and long terms. Pew Charitable Trusts says New Jersey is one of 10 states that still haven’t recovered tax revenue since the Great Recession, with only five states losing more ground.
Sheila Weinberg, founder and chief executive officer for Truth in Accounting, said the Comprehensive Annual Financial Report shows New Jersey’s long-term bills now exceed $208 billion – up $13 billion over the past year, equal to more than $65,000 per taxpayer.
“Unfortunately, your state’s financial condition continued to deteriorate last year,” Weinberg said.
The accumulated bills include nearly $99 billion for pensions and $92 billion for retiree health benefits, as well as more than $60 billion in bonded debt. Those and other liabilities are offset by $26 billion in available assets.
“While your pension plans are woefully underfunded, with only 43 cents set aside for every dollar that’s been promised, there has been no money set aside to fund the retiree health liabilities,” Weinberg said.
Those bills include future costs, for things like bonds, pensions and retiree health benefits – but Weinberg says those are due now, though the state is just choosing to pay it in the future.
“It’s kind of like you’re putting your groceries on your credit card,” she said. “And so the state has chosen to pay $209 billion in the future, but they do owe that balance right now.”
Divided among the number of income tax filers in the state, the long-term obligations amount to $65,100 apiece, says the report, up from $61,400 a year earlier. It remains lower than the $67,200 peak recorded in 2016.
The second highest is Illinois, with debts that equal $52,600 per taxpayer.
Truth in Accounting recommends the states use what Weinberg called “fact based budgeting” that includes full accrual calculations and techniques.
“So they couldn’t do games like recording loan proceeds as revenues,” she said. “So when they offer people as part of their compensation package pensions and retiree health care benefits, those costs would have to be included in the budget as the employee earns those, not kick the can down the road and make future taxpayers pay those.”
The Government Financial Officers Association standard says states should publish their CAFR 180 days after a fiscal year ends. New Jersey took 304 days for its last one, with only Illinois and California taking longer, according to the report.